IT cos on overdrive to get business from the clouds

July 13, 2009 10:08 IST

Patni Computer's new CEO Jeya Kumar feels "cloud computing" is the way to go as it will change the way people use, apply and adopt technology. The company is planning to set up labs in India and the US to generate intellectual property capabilities to develop solutions for firms that wish to access data and applications from the cloud.

Just what is cloud computing? Despite its somewhat esoteric name, it stands for technology that helps an organisation to place its applications and data on the Internet, thereby saving on spending on in-house hardware and software applications.

Most people who use web-based email services like Gmail, Yahoomail or Windows Live (Hotmail) or have watched a video online or shared snaps using photo-hosting services like flickr or snapfish or read news online or watch TV shows on the Internet may not realise that they are actually using 'cloud computing' services. Most players provide these services for free for individual users. For enterprise users, it's generally a paid subscription-based model - Google Apps being a good example.

While it's been around for a while abroad, Indian IT companies are catching up fast on cloud computing and are betting big on it. Wipro, for instance, has already built a "private cloud" for its internal purposes. The software giant is now offering that expertise to existing customers to optimise the computing power of their data centres.

Wipro is also building what it calls the "enterprise cloud" - a capability it plans to offer to clients who have already outsourced or plan to outsource their hosting or infrastructure management activities with the company.

Infosys has cloud computing-based solutions for the auto sector. And others such as HCL Technologies, Tata Consultancy Services, and even Bharti Airtel (with its network PC), aren't far behind. They will no doubt have stiff competition from global majors. Sensing the huge opportunity in India, IBM has already set up a cloud computing centre in Bangalore. Oracle is getting its act together, while Verizon too plans a cloud computing service in India this August.

The opportunities are simply huge. HCL Technologies CEO Vineet Nayar says cloud-based enterprise services provide an opportunity to create new business models and should not be seen as just another technology. It is a shift in the way IT delivers business capabilities by both corporations and service providers.

TCS chief S Ramadorai agrees. According to him, cloud computing-based IT services model for small- and medium-sized enterprises is an example of business model innovation that will set a new precedence in the IT industry.

Smaller Indian players are also fast taking the cue. Hexaware Technologies, for instance, has announced a strategic partnership with SOASTA - a leader in cloud testing, according to R V Ramanan, president of Global Delivery.

And Patni's Jeyakumar thinks the telecom boom will play a big role in the cloud computing opportunity. As bandwidth becomes cheap and more readily available, transmission speeds will no longer be an impediment, making it possible to store data and run software anywhere for users to access from wherever they want. The future will see technology moving completely to a virtual cloud-format, he says.

The number of applications and the amount of content in the cloud now available to both consumers and corporations has grown to a critical mass, according to analysts at Booz & Company. Gartner says worldwide service cloud revenue is on pace to surpass $56.3 billion in 2009, a 21.3 per cent increase in revenue from $46.4 billion in 2008. The market is expected to reach $150.1 billion in 2013.

The Indian market, according to Springboard Research, will register a compounded annual growth rate of 76 per cent between 2007 and 2011 and reach $260 million (around Rs 1,300 crore) in revenues by 2011.

So why the sudden craze over cloud computing? Ascentius Consulting principal analyst Alok Shende has an answer. "We anticipate cloud computing to be adopted in segments that currently have low IT penetration and demand IT solutions with low degree of complexity. Small to medium sized businesses will be the prime candidates. Large enterprises may have some initial concerns on compliance, data security and unproven reliability of cloud computing. However, there will be pockets such as back-up storage and hosted email service where large enterprises will be more open to employ the cloud," he says.

But there are hurdles too. Dearth of sufficient bandwidth, lack of robust networks, virtualisation and security issues could delay adoption of the technology. More than 30 per cent of large businesses have some enterprise applications in the cloud, but two-thirds do not have a security strategy for cloud computing, a survey conducted by IDC found.

Last, but not the least, everyone's talking about building a cloud these days. But if the IT world is filled with computing clouds, will each one be treated like a separate island or will open standards allow all to interoperate with each other? That's one of the questions being examined by the Open Cloud Consortium, a newly formed group of universities.